Theater chain Cineplex Galaxy has purchased Famous Players for $500 million, effectively redrawing the map of movie exhibition in Canada by consuming its archrival, while at the same time opening the door for new competitors.

The deal, expected for months and announced June 13, will add FP’s 81 theaters to the 86 already controlled by Cineplex Galaxy, adding up to more than 1,400 screens across Canada. The $500 million includes some $36 million in lease obligations.

But Cineplex must sell 35 of those locations in keeping with a ruling by the federal Competition Bureau. The theaters are in 17 cities where CG and FP used to compete, including Victoria, Vancouver, Calgary, Edmonton, Saskatoon, Winnipeg, London, Hamilton, Toronto and Montreal.

‘Our goal is to ensure that consumers continue to benefit from competitive prices and choice in the exhibition of first-run motion pictures,’ explains Gaston Jorré, the bureau’s senior deputy commissioner of competition, in a statement. ‘It is essential that these theaters be sold off to ensure that this merger does not result in a substantial prevention or lessening of competition.’

The specific theaters are named in the agreement, but are being kept confidential. They will be sold in three regional groups: Quebec, Ontario and Western Canada. A buyer could take one, two or all three blocks. The theaters will be held in trust if CG cannot find a buyer.

Which raises the question, who will step in? U.S.-based AMC Entertainment has been fighting an uphill battle for market share since it entered Canada in the late ’90s, and appears to be the most likely candidate, say observers. Alliance Atlantis also operates a handful of movie houses in Ontario and B.C., but has recently been shying away from the movie biz.

Other contenders may include Prairie-based Magic Lantern Theatres, Landmark Cinemas in the west, Empire Theatres in the Maritimes and Montreal-based Cinemas Guzzo.

FP’s former parent Viacom announced in February its plans to sell off non-core units, including the theater chain, the Paramount theme parks and some radio stations. The U.S. media powerhouse took heavy losses last year and chairman Sumner Redstone is preparing to split the company in two later this year.

But the Famous Players name will live on, since Cineplex Galaxy intends to operate its companies as separately branded chains. ‘The only exception will be Paramount-branded theaters,’ says CG spokesperson Pat Marshall. ‘Viacom owns that name and intends to retain it, so the four Paramount-branded theaters will be renamed.’

She adds that ticket prices won’t rise as a result of the merger.

The takeover is not expected to have much effect on moviegoers. ‘These changes are, for the most part, internal, and will not affect the movie-going experience or the customer,’ says Adina Lebo, executive director of the Motion Picture Theatre Associations of Canada.

Cineplex is owned by Toronto-based Onex Corp., which also owns or controls various real estate, health and financial outfits.

-www.cineplex.com

-www.famousplayers.com